Peter Schiff: SchiffGold Becomes SchiffSilver

The Reddit Raiders turned their eyes toward silver over the weekend. Interest in the white metal sparked a surge in retail demand and pushed the spot price of silver briefly over $29 an ounce. As Peter Schiff put it, the Reddit Riders were riding silver instead of piling into heavily shorted stocks.

But how should we look at this recent run-up in silver? And where might it go from here? Peter talked about it in his podcast.

Over the weekend, many of the big online retailers stopped selling silver and put messages on their website about shortages. But as Peter noted, there wasn’t actually a shortage of silver. These online companies don’t hold a lot of inventory. They buy silver from wholesalers and resell on the retail market. Since wholesalers were generally closed over the weekend, the retailers couldn’t immediately fill the surge in orders, and they weren’t willing to take the exposure of quoting a price not knowing what their cost was going to be Monday when they could complete the orders.

But the big retail run did strain supply. Peter said some of SchiffGold’s wholesalers ran out of some silver products on Monday.

But that didn’t mean we weren’t able to meet the demand, because we have other wholesaler relationships that we were able to turn to so everybody who called SchiffGold to buy silver got their orders filled.”

Peter said one of the most obvious impacts of the demand surge was an increase in premiums at the wholesale level.

That is because of a sudden rush in demand because you have a lot of people that were never buying silver all of a sudden buying it. In fact, at SchiffGold, it was a record day for new customers. We had a lot of people buying who had never bought from us before.”

Order sizes were a bit smaller than usual, although there were some big orders in there as well. But overall, it appears there were a lot of first-time buyers putting in smaller orders.

So, what should investors do now given the runup in the price of silver seems to have stalled? Peter advised caution.

I mean, $30 an ounce is a bit of resistance and I don’t necessarily think we’re going to move through that level like a hot knife through butter. This is not going to be like GameStop where you can send the stock up from whatever it was – ten, twenty dollars – up to 500. As I said in the last podcast, the Reddit Brigade just doesn’t have the firepower to really do that. But alternatively, this is a real market. And everybody who is buying silver, I believe, is going to make money if they hold it.”

As we wrote yesterday, there are fundamental reasons to be bullish on silver outside of the attention on Reddit message boards. Analysts were projecting big moves up in the price of silver this year long before the Reddit investors got interested. Bloomberg Intelligence predicted $50 silver in 2021.

But it wouldn’t be surprising if we saw a sharp pullback in the price after Monday’s big gains. In fact, silver was down Tuesday morning. Volatility is typical in the silver market. That coupled with disappointment that it didn’t rise like a rocketship could scare some inexperienced investors into selling for a loss.

But I think even the people who rushed in at the market and bought and paid $29.50 for their silver, if they just forget about it and tune out some of the noise and still own that silver in a year or two or five, I think they’re going to be very happy that they bought it. I think they’re going to make a lot of money. And what they should do is look for an opportunity to buy a pullback. If we get a correction from this spike, look to add to their position over time.”

Peter said one of the big positives of all this Reddit and chatroom attention on silver is that a lot of people who didn’t really know about it or understand it as in investment have become educated and some have become investors.

This is focusing a lot of attention on silver, so maybe some of the institutional investors who now are reading all these news stories and hearing about all these small guys buying silver, that may prompt them to do a little research on their own, and this could be the beginning of something that could really snowball, and a lot of new buyers could come into the market, maybe sooner than would have otherwise been the case.”

Peter reiterated something he said in his last podcast. He doesn’t think the Reddit Raiders can create a massive short squeeze in silver. But he thinks one is coming eventually.

But I don’t think it is starting now unless this is an immediate catalyst for bigger players to enter the market. My gut is that that’s not the case. But it will happen. And when it does happen, silver is going to go to the moon. But it’s not when you’re expecting it. It’s not like it’s going to happen right away because people are talking about it in a chatroom.”

The bottom line is people shouldn’t buy silver in order to try to squeeze the shorts. They should buy silver because it’s something you should be long.